Oz GDP Survives and the AUD Jumps
Aussie GDP is out this morning and the news is just good enough to save the Aussie.
Australian GDP for Q2 came in at 0.5% q/q vs expected 0.5%. This will be enough to keep the RBA somewhat happy and as such the AUD/USD has jumped.
There was some real downside risk here, given that a soft update would have almost locked in an October rate cut. Now those odds must push out somewhat, although the news isn’t exactly positive. With the headline number still being rather sluggish.
So the rally that we are getting is more on of relief than anything else and suggests that we might be able to kick the can down the road a little further.
Yesterday’s retail sales figure would also be of concern to Governor Lowe and that would be something for him to consider headed into the next meeting in a months time. The next key consideration will likely be the jobs report.
We’ve also seen more Chinese data today with the Caixin Services PMI coming in at 52.1.
For now we watch the next major hurdle in the Aussie that is 0.6800. There has been plenty of selling pressure here so far and if price notches above that point, it is fair to say that the RBA rate cuts are all but priced in.
From that point, I would expect a bit of upside, but its hard to see price trading above 0.7000 based on fundamentals. Also the fact that the USD is so strong, will continue to keep strong downward pressure on the Aussie.
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